Blog
A deep-dive into a variety of pension topics to help you understand and learn more about your pension and the Scheme.
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2/9/2024
Editorial
<p>At times through our working lives, many of us will look forward to the day that we stop work and finally claim our hard-earned pension savings. This National Payroll Week find out how your Railways Pension Scheme (RPS) pension benefits could be paid to you when you take them. </p><p>National Payroll Week aims to help raise awareness about payroll and how it works, so it’s a great opportunity to learn more about how your RPS pension savings may be paid to you, and to explore the options you might have to take them. </p><p>The way your pension is paid depends on:</p><ul><li>whether you’re a defined benefit (DB) member, or an Industry-Wide Defined Contribution (IWDC) member of the RPS; and</li><li>the option you choose when you take your pension benefits </li></ul><p>We can’t help decide which option is best for you, but this blog can offer some of the information you need to make a decision.</p><p>If you’re not sure whether you’re a DB or IWDC member of the Scheme, you can check in the <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">My Pension area, under ‘Membership Details’ and ‘Pension Type’ in your myRPS account</a>.</p><p> </p><h3>I’m a defined benefit (DB) member</h3><p>There are many different ways you can take your DB pension, so you can choose the option that’s right for your individual circumstances. The option you choose will determine how your pension benefits are paid to you when you take them. <br></p><p>Here’s a brief summary of the options available to DB members of the Scheme. There’s more detail on the options and how they work on the <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension" data-sf-ec-immutable="">Ways to take my pension page, in the ‘Defined benefit members’ area of your member website</a>. </p><p>If the rules for your Section of the Scheme allow, you can:</p><p style="margin-left: 30px"><strong>1. Take part lump sum, part pension<br></strong><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit">You may be able to take up to 25%, (but normally no more than £268,275) as a tax-free cash lump sum. The rules which explain the exact amount you can take as a lump sum are in your Member Guide. You can </span><a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="" style="font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; white-space: inherit">find your Member Guide in ‘My Library’ when you log in to myRPS</a><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit">.</span></p><p style="margin-left: 30px"><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"> </span></p><p style="margin-left: 30px"><strong>2. Take it all as pension</strong></p><p style="margin-left: 30px">You may be able to take all of your pension benefits as regular pension payments, and none as lump sum. This is done by converting any lump sum into additional pension. <br></p><p style="margin-left: 30px">This option may be restricted if you’ve paid any Additional Voluntary Contributions (AVCs) to BRASS, and depends on the rules for your Section. There’s more information on <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/transferring-my-pension" data-sf-ec-immutable="">the impact of AVCs in the ‘I’m planning to take my pension’ area of your member website</a>.</p><p style="margin-left: 30px"><br></p><p style="margin-left: 30px"><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit; font-size: inherit">3. Take it all as a cash lump sum</strong><br>This is only possible in some circumstances, and depends on the rules for your Section. You may be able to take it all as a cash lump sum if: </p><ul style="margin-left: 30px"><li>You have a small pension, usually where the value of all your pension benefits is no more than £30,000. You may be able to cash it in under what’s known as ‘Trivial Commutation’ rules. There’s <a href="https://cdn3.railpen.com/mp-sitefinity-prod/docs/default-source/rayn/guides-for-all-members/a-guide-to-trivial-commutation.pdf?sfvrsn=43f64793_16" data-sf-ec-immutable="">more information in the Read as You Need Guide to Trivial Commutation in the Knowledge Hub</a>.</li><li>You take your pension on the grounds of serious ill health, or</li><li>You get a short service leaver refund.</li></ul><p> </p><p style="margin-left: 30px"><strong>4. Take the level pension option</strong></p><p style="margin-left: 30px">The level pension option aims to level out your income in retirement. With this option, you get more pension from the RPS before your State Pension age (SPA), and less pension from the RPS after your SPA. You can <a href="https://www.gov.uk/state-pension-age" target="_blank" data-sf-ec-immutable="">check your State Pension age at Gov.uk</a>.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>5. Transfer your pension, with risks</strong></p><p style="margin-left: 30px">You may be able to transfer your DB pension to another pension provider. But transferring carries risks, and <a href="https://member.railwayspensions.co.uk/pension-essentials/pension-scams" data-sf-ec-immutable="">it's important you stay alert for scams</a>. You should think carefully before you transfer, as you could lose the valuable benefits of your DB pension.</p><p style="margin-left: 30px">If you’re considering a transfer, you might benefit from financial advice. You may have to take financial advice by law, depending on the value of your pension benefits. Please <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/transferring-my-pension" data-sf-ec-immutable="">read all of the information in the 'Transferring my pension' area</a> before you make a decision. </p><p style="margin-left: 30px">You cannot transfer your pension benefits when they are in payment.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>6. Get an extra pension for your dependants</strong><br>A pension will be paid to your eligible dependants, such as a spouse, when you die.<br><br>When you take your pension benefits, you could give up part of your own pension entitlement in order to give extra pension to your dependants.<br><br>If you choose this option:<br></p><ul style="margin-left: 60px"><li>You give up part of your pension – how much you give up will depend on your age and gender, as well as those of your dependant.</li><li>Your named dependant will get a percentage of your normal pension when you die.<br></li></ul><p style="margin-left: 30px">It’s important to keep in mind that if your named dependant dies before you, then the money you’ve given up will be lost and won’t go back into your pension. You also cannot change your named dependant.<br><br></p><p style="margin-left: 30px">For more <a href="https://cdn3.railpen.com/mp-sitefinity-prod/docs/default-source/rayn/guides-for-db-members---active-and-preserved/guide-to-retirement-options-from-the-railways-pension-scheme.pdf?sfvrsn=c6822889_21" data-sf-ec-immutable="">information on the extra pension for your dependants and the other retirement options, check the Guide to retirement options Read as You Need Guide</a> in the Knowledge Hub. </p><p><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"> </strong></p><p><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit">Try each option using the Pension Planner</strong><br></p><p>The Pension Planner lets you change the amount of lump sum you may be able to take when you retire, and see how this then affects your annual pension. The Planner also shows what it may look like if you were to take the level pension option.<br></p><p>If you pay into BRASS, you can use the Planner see how your BRASS fund works as part of your lump sum. <br></p><p>You might use the planner to compare different scenarios, and see how they might affect your lump sum and annual pension. The planner is available in the <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">‘Planning for the future’ area of your myRPS account</a>. </p><p> </p><h3>I’m an Industry-Wide Defined Contribution (IWDC) member </h3><p>If you’re an IWDC member of the Scheme, there are 3 main options available to you when you decide to take your pension pot. The options all come with different tax implications, benefits and risks. In short, here are the options available for IWDC members of the Scheme. <br></p><p>If you’d like more information on the options outlined below, take a look at the <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/how-i-can-take-my-iwdc-pot" data-sf-ec-immutable="">How I can take my IWDC pot page, under ‘IWDC’ members on your member website</a>. <br></p><p>The RPS doesn’t currently offer an annuity or drawdown option directly, so to access these you would need to transfer your pot to another provider.<br></p><p style="margin-left: 30px"><strong>1. Get a flexible income, taking it a bit at a time. This is known as drawdown.</strong><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"><br>A drawdown is a flexible income, which means you can take out cash (or drawdown on your pot) whenever you want to, until your pot runs out.</span></p><p style="margin-left: 30px">There’s more information about the types of drawdown available and how it works on the <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/understanding-drawdown" data-sf-ec-immutable="">dedicated Understanding drawdown page</a>. <br></p><p style="margin-left: 30px">The Trustee has chosen Legal and General Investment Management (LGIM) to offer access to a drawdown facility. You can <a href="https://www.legalandgeneral.com/workplace/campaigns/rps-pas" target="_blank" data-sf-ec-immutable="" data-sf-marked="">learn more about the LGIM drawdown facility on their website</a>. However, you can also choose your own drawdown provider and we will transfer your funds to them.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>2. Get a regular, secure income. This is known as an annuity.</strong></p><p style="margin-left: 30px">An annuity is a policy that you buy using the money from your IWDC pot. An annuity gives you regular pension payments, and guarantees an income for the rest of your life or for a fixed-term. If it is a fixed-term annuity, it will guarantee an income for a set period of time.<br></p><p style="margin-left: 30px">If you’d like to take an annuity, you will need to transfer your pension pot to another provider who offers annuity options. It’s important to research all of the options available, to help you choose the right option for the lifestyle you want when you stop working. <br></p><p style="margin-left: 30px">You can <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/understanding-annuities" data-sf-ec-immutable="">learn about the types of annuity and how they work on the Understanding annuities page</a>.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>3. Take all of the money in your IWDC pot as a cash lump sum, known as total encashment.</strong></p><p style="margin-left: 30px">Total encashment means taking all of your pension pot as a cash lump sum. The value of your pot will be paid directly to you in a single payment, and 25% of it (but normally no more than £268,275) will be tax-free. The rest of the payment will be taxed. <br></p><p style="margin-left: 30px">If you’d like to find out <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/understanding-encashment" data-sf-ec-immutable="">how total encashment works and the types of encashment available, read the information on the Understanding encashment page</a>.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>4. Choose more than one option<br></strong>You can use your pension pot to take a cash lump sum, and to also buy an annuity, or to draw down on it by taking a bit at a time. If you’d like to <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/how-i-can-take-my-iwdc-pot" data-sf-ec-immutable="" style="font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; white-space: inherit">learn more about how choosing more than one option works, visit the How can I take my IWDC pot page.</a><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"></strong><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"> </span></p><p style="margin-left: 30px"> </p><p><strong>Consider your options using the Retirement Modeller</strong></p><p>The Retirement Modeller shows the options you have to take your pension pot, and what your pension might be worth when you take it based on the option you choose.<br></p><p>You might use it to model a number of retirement scenarios, then compare the options and figures to help you decide which one might be right for you. You can give the Retirement Modeller a try for yourself in the <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">‘Planning for the future’ area of your myRPS account</a>.</p><p> </p><h3>Choosing the right option for you</h3><p>Deciding how you want to take your pension benefits is an important decision, and it can seem overwhelming. <br></p><p>As a member of the RPS, you have access to a number of resources that are designed to give you the information to help you choose what’s best for you, including the <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">pension planning tools in your myRPS account.</a> <br></p><p>We’ve created a short video that explains your retirement options in less than 5 minutes, available on the Scheme’s YouTube channel. There’s also a suite of informative videos to help you prepare for your life after work, so make sure you <a href="https://www.youtube.com/@railwayspensionscheme" data-sf-ec-immutable=""></a><a href="https://www.youtube.com/@railwayspensionscheme" target="_blank" data-sf-ec-immutable="" data-sf-marked="">subscribe to the channel if you haven’t already.</a></p><ul><li><a href="https://www.youtube.com/watch?v=IJ0qW1jzyDc&list=PLSU9RHGNlJacz8f0QOYD4959PIGYOaCLr&index=1" target="_blank" data-sf-ec-immutable="" data-sf-marked="">DB members can watch the video on retirement options here</a>.</li><li><a href="https://www.youtube.com/watch?v=4uGvpGkBf1A&list=PLSU9RHGNlJacz8f0QOYD4959PIGYOaCLr&index=2" target="_blank" data-sf-ec-immutable="" data-sf-marked="">IWDC members can watch the video on retirement options here</a>.<br></li></ul><p>If you’d like detailed information on your retirement options and how they work, check the dedicated Read as You Need guides.</p><ul><li><a href="https://cdn3.railpen.com/mp-sitefinity-prod/docs/default-source/rayn/guides-for-db-members---active-and-preserved/guide-to-retirement-options-from-the-railways-pension-scheme.pdf?sfvrsn=c6822889_21" data-sf-ec-immutable="">DB members can find their guide to retirement options here</a>.</li><li><a href="https://cdn3.railpen.com/mp-sitefinity-prod/docs/default-source/rayn/guides-of-iwdc-members/a-guide-to-retirement-options.pdf?sfvrsn=36c5518a_21" data-sf-ec-immutable="">IWDC members can read their guide to benefit options from a defined contribution arrangement here</a>.</li></ul><p> </p><p><strong>Take financial guidance and advice</strong></p><p>You may want to get expert help with deciding on the option that’s right for you. It’s worth taking the time to read all of the information available to you before you make your decision. <br></p><p>You can find a <a href="https://member.railwayspensions.co.uk/pension-essentials/guidance-advice" data-sf-ec-immutable="">list of trusted pension experts and advisers on the Guidance and Advice page</a>. Using a financial adviser can be expensive, but it may give you a better long term outcome. <br></p><p>Liverpool Victoria (LV) has been chosen as the preferred partner to give RPS members access to financial advice. LV are able to help with pension and financial advice, and they also have dedicated team who have specific knowledge about the Scheme. <a href="https://www.lv.com/pensions-retirement" target="_blank" data-sf-ec-immutable="" data-sf-marked="">For more information visit the Liverpool Victoria website</a>. <br></p><p> </p><p><strong>IWDC members can get a free appointment with Pension Wise</strong></p><p>If you’re a member of the IWDC Section and you’re aged 50 or over, you may be able to get a free appointment with Pension Wise to discuss the options to take money from your pension pot. Pension Wise is a service from MoneyHelper, backed by the government. You can <a href="https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise" target="_blank" data-sf-ec-immutable="" data-sf-marked="">book your free appointment on the Pension Wise website.</a> <br></p>
<p>At times through our working lives, many of us will look forward to the day that we stop work and finally claim our hard-earned pension savings. This National Payroll Week find out how your Railways Pension Scheme (RPS) pension benefits could be paid to you when you take them. </p><p>National Payroll Week aims to help raise awareness about payroll and how it works, so it’s a great opportunity to learn more about how your RPS pension savings may be paid to you, and to explore the options you might have to take them. </p><p>The way your pension is paid depends on:</p><ul><li>whether you’re a defined benefit (DB) member, or an Industry-Wide Defined Contribution (IWDC) member of the RPS; and</li><li>the option you choose when you take your pension benefits </li></ul><p>We can’t help decide which option is best for you, but this blog can offer some of the information you need to make a decision.</p><p>If you’re not sure whether you’re a DB or IWDC member of the Scheme, you can check in the <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">My Pension area, under ‘Membership Details’ and ‘Pension Type’ in your myRPS account</a>.</p><p> </p><h3>I’m a defined benefit (DB) member</h3><p>There are many different ways you can take your DB pension, so you can choose the option that’s right for your individual circumstances. The option you choose will determine how your pension benefits are paid to you when you take them. <br></p><p>Here’s a brief summary of the options available to DB members of the Scheme. There’s more detail on the options and how they work on the <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension" data-sf-ec-immutable="">Ways to take my pension page, in the ‘Defined benefit members’ area of your member website</a>. </p><p>If the rules for your Section of the Scheme allow, you can:</p><p style="margin-left: 30px"><strong>1. Take part lump sum, part pension<br></strong><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit">You may be able to take up to 25%, (but normally no more than £268,275) as a tax-free cash lump sum. The rules which explain the exact amount you can take as a lump sum are in your Member Guide. You can </span><a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="" style="font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; white-space: inherit">find your Member Guide in ‘My Library’ when you log in to myRPS</a><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit">.</span></p><p style="margin-left: 30px"><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"> </span></p><p style="margin-left: 30px"><strong>2. Take it all as pension</strong></p><p style="margin-left: 30px">You may be able to take all of your pension benefits as regular pension payments, and none as lump sum. This is done by converting any lump sum into additional pension. <br></p><p style="margin-left: 30px">This option may be restricted if you’ve paid any Additional Voluntary Contributions (AVCs) to BRASS, and depends on the rules for your Section. There’s more information on <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/transferring-my-pension" data-sf-ec-immutable="">the impact of AVCs in the ‘I’m planning to take my pension’ area of your member website</a>.</p><p style="margin-left: 30px"><br></p><p style="margin-left: 30px"><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit; font-size: inherit">3. Take it all as a cash lump sum</strong><br>This is only possible in some circumstances, and depends on the rules for your Section. You may be able to take it all as a cash lump sum if: </p><ul style="margin-left: 30px"><li>You have a small pension, usually where the value of all your pension benefits is no more than £30,000. You may be able to cash it in under what’s known as ‘Trivial Commutation’ rules. There’s <a href="https://cdn3.railpen.com/mp-sitefinity-prod/docs/default-source/rayn/guides-for-all-members/a-guide-to-trivial-commutation.pdf?sfvrsn=43f64793_16" data-sf-ec-immutable="">more information in the Read as You Need Guide to Trivial Commutation in the Knowledge Hub</a>.</li><li>You take your pension on the grounds of serious ill health, or</li><li>You get a short service leaver refund.</li></ul><p> </p><p style="margin-left: 30px"><strong>4. Take the level pension option</strong></p><p style="margin-left: 30px">The level pension option aims to level out your income in retirement. With this option, you get more pension from the RPS before your State Pension age (SPA), and less pension from the RPS after your SPA. You can <a href="https://www.gov.uk/state-pension-age" target="_blank" data-sf-ec-immutable="">check your State Pension age at Gov.uk</a>.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>5. Transfer your pension, with risks</strong></p><p style="margin-left: 30px">You may be able to transfer your DB pension to another pension provider. But transferring carries risks, and <a href="https://member.railwayspensions.co.uk/pension-essentials/pension-scams" data-sf-ec-immutable="">it's important you stay alert for scams</a>. You should think carefully before you transfer, as you could lose the valuable benefits of your DB pension.</p><p style="margin-left: 30px">If you’re considering a transfer, you might benefit from financial advice. You may have to take financial advice by law, depending on the value of your pension benefits. Please <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/transferring-my-pension" data-sf-ec-immutable="">read all of the information in the 'Transferring my pension' area</a> before you make a decision. </p><p style="margin-left: 30px">You cannot transfer your pension benefits when they are in payment.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>6. Get an extra pension for your dependants</strong><br>A pension will be paid to your eligible dependants, such as a spouse, when you die.<br><br>When you take your pension benefits, you could give up part of your own pension entitlement in order to give extra pension to your dependants.<br><br>If you choose this option:<br></p><ul style="margin-left: 60px"><li>You give up part of your pension – how much you give up will depend on your age and gender, as well as those of your dependant.</li><li>Your named dependant will get a percentage of your normal pension when you die.<br></li></ul><p style="margin-left: 30px">It’s important to keep in mind that if your named dependant dies before you, then the money you’ve given up will be lost and won’t go back into your pension. You also cannot change your named dependant.<br><br></p><p style="margin-left: 30px">For more <a href="https://cdn3.railpen.com/mp-sitefinity-prod/docs/default-source/rayn/guides-for-db-members---active-and-preserved/guide-to-retirement-options-from-the-railways-pension-scheme.pdf?sfvrsn=c6822889_21" data-sf-ec-immutable="">information on the extra pension for your dependants and the other retirement options, check the Guide to retirement options Read as You Need Guide</a> in the Knowledge Hub. </p><p><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"> </strong></p><p><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit">Try each option using the Pension Planner</strong><br></p><p>The Pension Planner lets you change the amount of lump sum you may be able to take when you retire, and see how this then affects your annual pension. The Planner also shows what it may look like if you were to take the level pension option.<br></p><p>If you pay into BRASS, you can use the Planner see how your BRASS fund works as part of your lump sum. <br></p><p>You might use the planner to compare different scenarios, and see how they might affect your lump sum and annual pension. The planner is available in the <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">‘Planning for the future’ area of your myRPS account</a>. </p><p> </p><h3>I’m an Industry-Wide Defined Contribution (IWDC) member </h3><p>If you’re an IWDC member of the Scheme, there are 3 main options available to you when you decide to take your pension pot. The options all come with different tax implications, benefits and risks. In short, here are the options available for IWDC members of the Scheme. <br></p><p>If you’d like more information on the options outlined below, take a look at the <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/how-i-can-take-my-iwdc-pot" data-sf-ec-immutable="">How I can take my IWDC pot page, under ‘IWDC’ members on your member website</a>. <br></p><p>The RPS doesn’t currently offer an annuity or drawdown option directly, so to access these you would need to transfer your pot to another provider.<br></p><p style="margin-left: 30px"><strong>1. Get a flexible income, taking it a bit at a time. This is known as drawdown.</strong><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"><br>A drawdown is a flexible income, which means you can take out cash (or drawdown on your pot) whenever you want to, until your pot runs out.</span></p><p style="margin-left: 30px">There’s more information about the types of drawdown available and how it works on the <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/understanding-drawdown" data-sf-ec-immutable="">dedicated Understanding drawdown page</a>. <br></p><p style="margin-left: 30px">The Trustee has chosen Legal and General Investment Management (LGIM) to offer access to a drawdown facility. You can <a href="https://www.legalandgeneral.com/workplace/campaigns/rps-pas" target="_blank" data-sf-ec-immutable="" data-sf-marked="">learn more about the LGIM drawdown facility on their website</a>. However, you can also choose your own drawdown provider and we will transfer your funds to them.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>2. Get a regular, secure income. This is known as an annuity.</strong></p><p style="margin-left: 30px">An annuity is a policy that you buy using the money from your IWDC pot. An annuity gives you regular pension payments, and guarantees an income for the rest of your life or for a fixed-term. If it is a fixed-term annuity, it will guarantee an income for a set period of time.<br></p><p style="margin-left: 30px">If you’d like to take an annuity, you will need to transfer your pension pot to another provider who offers annuity options. It’s important to research all of the options available, to help you choose the right option for the lifestyle you want when you stop working. <br></p><p style="margin-left: 30px">You can <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/understanding-annuities" data-sf-ec-immutable="">learn about the types of annuity and how they work on the Understanding annuities page</a>.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>3. Take all of the money in your IWDC pot as a cash lump sum, known as total encashment.</strong></p><p style="margin-left: 30px">Total encashment means taking all of your pension pot as a cash lump sum. The value of your pot will be paid directly to you in a single payment, and 25% of it (but normally no more than £268,275) will be tax-free. The rest of the payment will be taxed. <br></p><p style="margin-left: 30px">If you’d like to find out <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/understanding-encashment" data-sf-ec-immutable="">how total encashment works and the types of encashment available, read the information on the Understanding encashment page</a>.</p><p style="margin-left: 30px"> </p><p style="margin-left: 30px"><strong>4. Choose more than one option<br></strong>You can use your pension pot to take a cash lump sum, and to also buy an annuity, or to draw down on it by taking a bit at a time. If you’d like to <a href="https://member.railwayspensions.co.uk/iwdc-members/im-planning-to-take-my-iwdc-pot/how-i-can-take-my-iwdc-pot" data-sf-ec-immutable="" style="font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; white-space: inherit">learn more about how choosing more than one option works, visit the How can I take my IWDC pot page.</a><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"></strong><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; word-spacing: normal; caret-color: auto; white-space: inherit"> </span></p><p style="margin-left: 30px"> </p><p><strong>Consider your options using the Retirement Modeller</strong></p><p>The Retirement Modeller shows the options you have to take your pension pot, and what your pension might be worth when you take it based on the option you choose.<br></p><p>You might use it to model a number of retirement scenarios, then compare the options and figures to help you decide which one might be right for you. You can give the Retirement Modeller a try for yourself in the <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">‘Planning for the future’ area of your myRPS account</a>.</p><p> </p><h3>Choosing the right option for you</h3><p>Deciding how you want to take your pension benefits is an important decision, and it can seem overwhelming. <br></p><p>As a member of the RPS, you have access to a number of resources that are designed to give you the information to help you choose what’s best for you, including the <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">pension planning tools in your myRPS account.</a> <br></p><p>We’ve created a short video that explains your retirement options in less than 5 minutes, available on the Scheme’s YouTube channel. There’s also a suite of informative videos to help you prepare for your life after work, so make sure you <a href="https://www.youtube.com/@railwayspensionscheme" data-sf-ec-immutable=""></a><a href="https://www.youtube.com/@railwayspensionscheme" target="_blank" data-sf-ec-immutable="" data-sf-marked="">subscribe to the channel if you haven’t already.</a></p><ul><li><a href="https://www.youtube.com/watch?v=IJ0qW1jzyDc&list=PLSU9RHGNlJacz8f0QOYD4959PIGYOaCLr&index=1" target="_blank" data-sf-ec-immutable="" data-sf-marked="">DB members can watch the video on retirement options here</a>.</li><li><a href="https://www.youtube.com/watch?v=4uGvpGkBf1A&list=PLSU9RHGNlJacz8f0QOYD4959PIGYOaCLr&index=2" target="_blank" data-sf-ec-immutable="" data-sf-marked="">IWDC members can watch the video on retirement options here</a>.<br></li></ul><p>If you’d like detailed information on your retirement options and how they work, check the dedicated Read as You Need guides.</p><ul><li><a href="https://cdn3.railpen.com/mp-sitefinity-prod/docs/default-source/rayn/guides-for-db-members---active-and-preserved/guide-to-retirement-options-from-the-railways-pension-scheme.pdf?sfvrsn=c6822889_21" data-sf-ec-immutable="">DB members can find their guide to retirement options here</a>.</li><li><a href="https://cdn3.railpen.com/mp-sitefinity-prod/docs/default-source/rayn/guides-of-iwdc-members/a-guide-to-retirement-options.pdf?sfvrsn=36c5518a_21" data-sf-ec-immutable="">IWDC members can read their guide to benefit options from a defined contribution arrangement here</a>.</li></ul><p> </p><p><strong>Take financial guidance and advice</strong></p><p>You may want to get expert help with deciding on the option that’s right for you. It’s worth taking the time to read all of the information available to you before you make your decision. <br></p><p>You can find a <a href="https://member.railwayspensions.co.uk/pension-essentials/guidance-advice" data-sf-ec-immutable="">list of trusted pension experts and advisers on the Guidance and Advice page</a>. Using a financial adviser can be expensive, but it may give you a better long term outcome. <br></p><p>Liverpool Victoria (LV) has been chosen as the preferred partner to give RPS members access to financial advice. LV are able to help with pension and financial advice, and they also have dedicated team who have specific knowledge about the Scheme. <a href="https://www.lv.com/pensions-retirement" target="_blank" data-sf-ec-immutable="" data-sf-marked="">For more information visit the Liverpool Victoria website</a>. <br></p><p> </p><p><strong>IWDC members can get a free appointment with Pension Wise</strong></p><p>If you’re a member of the IWDC Section and you’re aged 50 or over, you may be able to get a free appointment with Pension Wise to discuss the options to take money from your pension pot. Pension Wise is a service from MoneyHelper, backed by the government. You can <a href="https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise" target="_blank" data-sf-ec-immutable="" data-sf-marked="">book your free appointment on the Pension Wise website.</a> <br></p>
Blog
How will my RPS pension be paid when I stop working?
We’re marking this National Payroll Week (2-6 September) with this whistle stop guide to how your RPS pension benefits could be paid to you when you stop working.
At times through our working lives, many of us will look forward to the day that we stop work and finally claim our hard-earned pension savings. This National Payroll Week find out how your Railways Pension Scheme (RPS) pension benefits could be paid to you when you take them.
National Payroll Week aims to help raise awareness about payroll and how it works, so it’s a great opportunity to learn more about how your RPS pension savings may be paid to you, and to explore the options you might have to take them.
The way your pension is paid depends on:
- whether you’re a defined benefit (DB) member, or an Industry-Wide Defined Contribution (IWDC) member of the RPS; and
- the option you choose when you take your pension benefits
We can’t help decide which option is best for you, but this blog can offer some of the information you need to make a decision.
If you’re not sure whether you’re a DB or IWDC member of the Scheme, you can check in the My Pension area, under ‘Membership Details’ and ‘Pension Type’ in your myRPS account.
I’m a defined benefit (DB) member
There are many different ways you can take your DB pension, so you can choose the option that’s right for your individual circumstances. The option you choose will determine how your pension benefits are paid to you when you take them.
Here’s a brief summary of the options available to DB members of the Scheme. There’s more detail on the options and how they work on the Ways to take my pension page, in the ‘Defined benefit members’ area of your member website.
If the rules for your Section of the Scheme allow, you can:
1. Take part lump sum, part pension
You may be able to take up to 25%, (but normally no more than £268,275) as a tax-free cash lump sum. The rules which explain the exact amount you can take as a lump sum are in your Member Guide. You can find your Member Guide in ‘My Library’ when you log in to myRPS.
2. Take it all as pension
You may be able to take all of your pension benefits as regular pension payments, and none as lump sum. This is done by converting any lump sum into additional pension.
This option may be restricted if you’ve paid any Additional Voluntary Contributions (AVCs) to BRASS, and depends on the rules for your Section. There’s more information on the impact of AVCs in the ‘I’m planning to take my pension’ area of your member website.
3. Take it all as a cash lump sum
This is only possible in some circumstances, and depends on the rules for your Section. You may be able to take it all as a cash lump sum if:
- You have a small pension, usually where the value of all your pension benefits is no more than £30,000. You may be able to cash it in under what’s known as ‘Trivial Commutation’ rules. There’s more information in the Read as You Need Guide to Trivial Commutation in the Knowledge Hub.
- You take your pension on the grounds of serious ill health, or
- You get a short service leaver refund.
4. Take the level pension option
The level pension option aims to level out your income in retirement. With this option, you get more pension from the RPS before your State Pension age (SPA), and less pension from the RPS after your SPA. You can check your State Pension age at Gov.uk.
5. Transfer your pension, with risks
You may be able to transfer your DB pension to another pension provider. But transferring carries risks, and it's important you stay alert for scams. You should think carefully before you transfer, as you could lose the valuable benefits of your DB pension.
If you’re considering a transfer, you might benefit from financial advice. You may have to take financial advice by law, depending on the value of your pension benefits. Please read all of the information in the 'Transferring my pension' area before you make a decision.
You cannot transfer your pension benefits when they are in payment.
6. Get an extra pension for your dependants
A pension will be paid to your eligible dependants, such as a spouse, when you die.
When you take your pension benefits, you could give up part of your own pension entitlement in order to give extra pension to your dependants.
If you choose this option:
- You give up part of your pension – how much you give up will depend on your age and gender, as well as those of your dependant.
- Your named dependant will get a percentage of your normal pension when you die.
It’s important to keep in mind that if your named dependant dies before you, then the money you’ve given up will be lost and won’t go back into your pension. You also cannot change your named dependant.
For more information on the extra pension for your dependants and the other retirement options, check the Guide to retirement options Read as You Need Guide in the Knowledge Hub.
Try each option using the Pension Planner
The Pension Planner lets you change the amount of lump sum you may be able to take when you retire, and see how this then affects your annual pension. The Planner also shows what it may look like if you were to take the level pension option.
If you pay into BRASS, you can use the Planner see how your BRASS fund works as part of your lump sum.
You might use the planner to compare different scenarios, and see how they might affect your lump sum and annual pension. The planner is available in the ‘Planning for the future’ area of your myRPS account.
I’m an Industry-Wide Defined Contribution (IWDC) member
If you’re an IWDC member of the Scheme, there are 3 main options available to you when you decide to take your pension pot. The options all come with different tax implications, benefits and risks. In short, here are the options available for IWDC members of the Scheme.
If you’d like more information on the options outlined below, take a look at the How I can take my IWDC pot page, under ‘IWDC’ members on your member website.
The RPS doesn’t currently offer an annuity or drawdown option directly, so to access these you would need to transfer your pot to another provider.
1. Get a flexible income, taking it a bit at a time. This is known as drawdown.
A drawdown is a flexible income, which means you can take out cash (or drawdown on your pot) whenever you want to, until your pot runs out.
There’s more information about the types of drawdown available and how it works on the dedicated Understanding drawdown page.
The Trustee has chosen Legal and General Investment Management (LGIM) to offer access to a drawdown facility. You can learn more about the LGIM drawdown facility on their website. However, you can also choose your own drawdown provider and we will transfer your funds to them.
2. Get a regular, secure income. This is known as an annuity.
An annuity is a policy that you buy using the money from your IWDC pot. An annuity gives you regular pension payments, and guarantees an income for the rest of your life or for a fixed-term. If it is a fixed-term annuity, it will guarantee an income for a set period of time.
If you’d like to take an annuity, you will need to transfer your pension pot to another provider who offers annuity options. It’s important to research all of the options available, to help you choose the right option for the lifestyle you want when you stop working.
You can learn about the types of annuity and how they work on the Understanding annuities page.
3. Take all of the money in your IWDC pot as a cash lump sum, known as total encashment.
Total encashment means taking all of your pension pot as a cash lump sum. The value of your pot will be paid directly to you in a single payment, and 25% of it (but normally no more than £268,275) will be tax-free. The rest of the payment will be taxed.
If you’d like to find out how total encashment works and the types of encashment available, read the information on the Understanding encashment page.
4. Choose more than one option
You can use your pension pot to take a cash lump sum, and to also buy an annuity, or to draw down on it by taking a bit at a time. If you’d like to learn more about how choosing more than one option works, visit the How can I take my IWDC pot page.
Consider your options using the Retirement Modeller
The Retirement Modeller shows the options you have to take your pension pot, and what your pension might be worth when you take it based on the option you choose.
You might use it to model a number of retirement scenarios, then compare the options and figures to help you decide which one might be right for you. You can give the Retirement Modeller a try for yourself in the ‘Planning for the future’ area of your myRPS account.
Choosing the right option for you
Deciding how you want to take your pension benefits is an important decision, and it can seem overwhelming.
As a member of the RPS, you have access to a number of resources that are designed to give you the information to help you choose what’s best for you, including the pension planning tools in your myRPS account.
We’ve created a short video that explains your retirement options in less than 5 minutes, available on the Scheme’s YouTube channel. There’s also a suite of informative videos to help you prepare for your life after work, so make sure you subscribe to the channel if you haven’t already.
- DB members can watch the video on retirement options here.
- IWDC members can watch the video on retirement options here.
If you’d like detailed information on your retirement options and how they work, check the dedicated Read as You Need guides.
- DB members can find their guide to retirement options here.
- IWDC members can read their guide to benefit options from a defined contribution arrangement here.
Take financial guidance and advice
You may want to get expert help with deciding on the option that’s right for you. It’s worth taking the time to read all of the information available to you before you make your decision.
You can find a list of trusted pension experts and advisers on the Guidance and Advice page. Using a financial adviser can be expensive, but it may give you a better long term outcome.
Liverpool Victoria (LV) has been chosen as the preferred partner to give RPS members access to financial advice. LV are able to help with pension and financial advice, and they also have dedicated team who have specific knowledge about the Scheme. For more information visit the Liverpool Victoria website.
IWDC members can get a free appointment with Pension Wise
If you’re a member of the IWDC Section and you’re aged 50 or over, you may be able to get a free appointment with Pension Wise to discuss the options to take money from your pension pot. Pension Wise is a service from MoneyHelper, backed by the government. You can book your free appointment on the Pension Wise website.
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